Future’s Ramblings – Issue 15 – December 13, 2005
We often find ourselves in the situation where we are explaining to clients that new ideas and initiatives in their organization may well lead to the development of new spaces in their work environments. It is true that ten years ago quiet rooms, prayer rooms, or the various types of meeting and breakout spaces that you see in today’s work environments were not as prevalent as they are today. So hearing about a company putting a unique space into their mix is nothing to stop the press over, never the less, the other day I read a story about a new space that caught my attention.
The aspect of this story that compelled me wasn’t the space itself, but the aspirations the company had in creating this space, their drivers were interesting. The company is Wal-Mart, not being American some of you may not have heard of Wal-Mart. They are a large US retailer, a single buyer for a number of major markets. In fact Wal-Mart control 38 % of the market for several goods, it’s the kind of place you can go to and buy just about anything: bicycles, margarine, shotguns. They are the largest toy seller and grocer in the US. Their sheer size gives them power to dictate price and delivery times of goods to their 21,000 suppliers. If a manufacturer chooses not to follow their edict, they run the risk of seriously hurting their bottom line.
Wal–Mart is quite a fascinating company. In 2002 Wal-Mart shifted the balance in the Fortune 500 away from companies like General Motors and Exxon to mass consumer – merchandisers and retailers. Wal – Mart is now number one, they are the largest corporation in terms of sales in the WORLD. They sold $244.5 billion worth of goods last year and in a three month period sell what the number two retailer sells in a year. They have no real rivals and are growing at a rate of 15% per year. Wal-Mart is a template firm that has set the standard for many others.
Consumers in the US have benefited , Wal-Mart is partly responsible for the low inflation rate in the US and a McKinsey & Co. study concluded that about 12% of the US economy’s productivity gains in the second half of 1990 could be traced to Wal-Mart alone! How do they do it? Well their leverage lies in the fact that they are the end of the supply chain, they know what is being sold and are able to then tell the producers what needs to be made, when it needs to be done and where to deliver it.
Manufacturers are dependant on Wal-Mart’s knowledge of the market. This knowledge is gained through careful analysis of data collected from bar codes that track sales of items on specific days, weeks, hour of the day etc. This knowledge wields them great power. One example of this is the fact that many of Wal-Marts suppliers have been forced to lay off employees in the US and outsource their products overseas. This is the result of the pressure put on the suppliers to drive prices lower. Consequently, Wal-Mart’s success is due in part to the import of product from low-wage countries such as China. Despite the fact that Wal-Mart pushed a “Buy American” banner in the late 1980’s and early 90’s, they have doubled their imports from China in the past five years, buying $12 million in merchandise in 2002. This is nearly 10% of all imports to the United States.
Another contributing factors to Wal-Mart’s success is the way they treat their employees. Here is an excerpt from an internal memo describing Wal-Mart hiring practice. “all jobs to include some physical activity (e.g., all cashiers do some cart – gathering)” “ It will be far easier to attract and retain a healthier work force than it will be to change behaviour in an existing one,” “These moves would also dissuade unhealthy people from coming to work at Wal-Mart”. You don’t have to read between the lines too much to see why statements such as these have given birth to entire web sites such as Wakeup Wal-Mart and Wal-Mart Watch that are dedicated to bashing the company and exposing their bad behaviours. With any luck it will also earn them a well deserved Americans with Disabilities Act class action lawsuit.
The negative publicity has become a real pain in Wal-Mart’s behind, right where their wallet is. In fact a confidential report compiled by McKinsey & Co. found that 2 to 8 percent of Wal- Mart consumers have ceased shopping there due to the “negative press they have heard”The Company executives were not prepared to deal with the impact of the negative press going around and decided to do something about it, and that is where new spaces and innovative approaches to problems come into the picture. Wal-Mart has created a war room in their Bentonville headquarters to enable them to react to what they believe is the most extensive campaign ever waged against a corporation.
In addition to the war room Wal-Mart has engaged Edelman, one of the largest PR firms in America to help. Edelman has assigned two of their top operatives to the account, one who was a previous adviser to Bill Clinton when he was having Monica problems, and the other was the creative force behind Ronald Regan never getting blamed for anything. In addition, six former political operatives have been dispatched to the Bentonville war room to do damage control. They start at 7 each morning, the room’s walls are covered with display boards and to-do lists for the team. Two large maps on the wall show locations of all Wal-Mart stores across the US. The team scans newspaper article and television transcripts that mention Wal-Mart. Then they call employees around the country to plan for events, whenever possible the war room will try to neutralise criticism before it starts. Their strategy is paying off, they say that many of the stories written in the press contain their messages. It is a proactive response to a bad situation.
What is interesting about this is the unique blending of disciplines: retail, politics, public relations, and architecture to solve a problem. It is also encouraging to see the exploitation and abuses of companies like Wal-Mart moving to the front burner. Mind you exposing such behaviours and stopping them are two different things. Never the less there is hope on the horizon. As of 2004 any company listed on the New York Stock Exchange and Nasdaq is required to adopt and disclose a code of conduct. In addition, calls for a defined standard of corporate conduct are emerging around the globe the United Nations Global Compact and the Consumer Charter for Global Business have endorsed conduct codes. In other regions bodies like the Hong Kong’s Independent commission Against Corruption, South Africa’s King Committee on Corporate Governance, the Brazilian Institute of Corporate Governance and the Japanese prime minister’s 2002 advisory panel have all advised companies to create codes that will outline quality of life and corporate responsibility.
What does all of this mean to us as designers? Well it reminds us that our jobs are becoming even more difficult because the problems we solve have a higher degree of complexity than ever before. Our client’s demands are different today to what they have been in the past and this may leave us ill equipped to help them. We may need to engage others to develop new attitudes and innovative approaches to tackle issues we never knew were in our realm. In addition, it reminds us that the more we know about the issues our clients deal with the more we will be able to help them control all of the things out there in the world that are volatile. The possibilities are both frightening and exciting because to really be on top of it, we will need to continue to evolve as a company and as individuals.
I will leave you with a story: When my oldest son Harry was about 8 he and a friend of his decided they did not want those gym shoes with the swoosh on them, Nike, because they heard the company employed and exploited children their age in other countries to make their products. I thought this was quite astute for an 8 year old, but he is my son – came out of the womb facing left. At any rate, we were delighted at this small token of compassion shown by our son; the real delight came from knowing we would save a good deal of money never having to pay for expensive branded gym shoes. We were comforted in knowing we could just buy him something cheap at Wal-Mart.
Geyer Future Environments wants to wish you a happy and safe holiday season, we look forward to sharing a new year of exciting opportunities and ideas with you.
Sources for this rambling
The New York Times
“A New Weapon for Wal-Mart: A War Room”
November 1, 2005
“The Wal – Mart You Don’t Know”
By Charles Fishman
Fast Company – December 2003
”Inside the Worlds Largest Company” by Edna Bonaciche
Frontline excerpts PBS
“Up to Code – Does Your Company’s Conduct Meet World-Class Standards?”
By Lynn Paine, Rohit Deshpande, Joshua D. Margolis, and Kim Eric Bettcher
The Harvard Business Review – December 2005
“Wal-Mart: Discriminate to Save Health Care Costs”
Labor Blog – October 25, 2005 http://www.NathanNewman.org